Smart financial moves for women

On March 8, we observe International Women’s Day, a celebration of women’s economic, political and social achievements. Yet women everywhere still face challenges — and here in the United States, one of their biggest challenges may be to gain the resources they need to enjoy a comfortable retirement. So, if you’re a woman, what steps should you take to make progress toward this goal?

Your first move should be to recognize some of the potential barriers to attaining your financial freedom. First of all, a “wage gap” between women and men still exists: The median earnings of full-time female workers are 77% of the median earnings of full-time male workers, according to the U.S. Bureau of Labor Statistics. Also, women drop out of the workforce for an average of 12 years to care for young children or aging parents, according to the Older Women’s League, a research and advocacy group — and this time away from the workforce results in women receiving lower pensions or accumulating much less money in their employer-sponsored retirement plans.

To give yourself the opportunity to enjoy a comfortable retirement lifestyle, consider these suggestions:

• Boost your retirement plan contributions. Each year, put in as much as you can afford to your traditional or Roth IRA. A traditional IRA grows on a tax-deferred basis, while a Roth IRA can grow tax free provided you meet certain conditions. Also, take advantage of your employer-sponsored, tax-deferred retirement plan, such as a 401(k), 403(b) or 457(b). At the very least, contribute as much to earn your employer’s matching contribution, if one is offered. And every year, if your salary increases, try to boost your contributions to your retirement plan.

• Consider growth investments. Some evidence suggests that women may be more conservative investors than men — in other words, women may tend to take fewer risks and pursue “safer” investments. But to help build the resources you will need for a comfortable retirement, consider growth-oriented vehicles in your IRA, 401(k) and other investment accounts.

• Talk to your spouse about Social Security. If your spouse starts collecting Social Security at 62 (the earliest age of eligibility), the monthly benefits will be reduced, perhaps by as much as 25%. This reduction could affect you if you ever become a widow, because once you reach your own “full” retirement age (which will likely be 66 or 67), you may qualify for survivor benefits of 100% of what your deceased spouse had been receiving — and if that amount was reduced, that’s what you’ll get. Talk to your spouse about this issue well before it’s time to receive Social Security. (You may also want to talk to a financial advisor for help in coordinating survivor benefits with your own Social Security retirement benefits.)

• Evaluate your need for life insurance benefits. Once their children are grown, some couples drop their life insurance. Yet, the death benefit from a life insurance policy can go a long way toward helping ensure your financial security. Again, talk to your spouse about whether to maintain life insurance, and for how much.

International Women’s Day is a great occasion for commemorating women’s accomplishments. And by making the right moves, you can eventually celebrate your own achievement of attaining the financial security you deserve.